A Division Bench comprising Justice R. F. Nariman and Justice Navin Sinha has in a recent decision in Kandla Export Corporation & Anr. v M/s OCI Corporation & Anr.[[1]] held that the provision for appeal, as provided under §13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015 ('Commercial Courts Act') could not be invoked to challenge an order allowing the execution of foreign arbitration award.
Facts:
Disputes arose between Kandla Export Corporation ('Kandla') and M/s OCI Corporation ('OCI'), and were settled by way of a foreign arbitration award dated 28 April 2014 in favour of OCI. The execution application filed by OCI was allowed by the Commercial Division in the High Court of Gujarat.
Being aggrieved by this execution order, Kandla filed an appeal under §13(1) of the Commercial Courts Act which was dismissed, on the grounds that such an appeal could not be filed from a judgment enforcing a foreign award as §50 of the Arbitration & Conciliation Act, 1996 ('A&C Act') did not allow for such an appeal. This order was appealed before the Supreme Court.
Proceedings before the Supreme Court:
Kandla contented that §13(1) of the Commercial Courts Act allows for appeals against decisions and orders of the Commercial Court or Commercial Divisions of a High Court. Further, in the proviso to §13(1) no mention of §50 of the A&C Act was found. This fact read along with §21 of the Commercial Courts Act gives the provisions of the Commercial Courts Act an overriding effect over other laws and means that an appeal against an order allowing enforcement was permissible irrespective of §50 of the A&C Act.
OCI on the other hand contended that the A&C Act was a complete code in itself and the applicability of the Commercial Courts Act was excluded. It was also contended that since under §50 of the A&C Act an appeal was barred, §11 of the Commercial Courts Act which bars the jurisdiction of Commercial Courts where a proceeding is otherwise barred in law, would come in to the picture and the applicability of §21 and §13 of the Commercial Courts Act stood excluded.
Judgment:
The Supreme Court declined to interfere with the order of the High Court. In its reasoning, the Supreme Court relied upon its earlier order in Fuerst Day Lawson Limited v Jindal Exports Limited[2], where it had ruled that an order that was not appealable under §50 of the A&C Act was not appealable under the Letters Patent of the High Court.
The Supreme Court relied upon its findings in Fuerst Day Lawson and reiterated that the A&C Act is a self-contained code. Since §50 of the A&C Act does not provide for an appeal against an order permitting enforcement, the general right to appeal provided under §13 of the Commercial Courts Act would be of no assistance to Kandla.
The Supreme Court also pointed out that the object of the A&C Act as well as the Commercial Courts Act is speedy resolution of disputes. To interpret the statute in such a manner that an additional appeal is made available to a party, which is otherwise not ordinarily available in law would be to defeat the object and reasons behind these statutes.
The Supreme Court noted that if Kandla's contentions were accepted then in arbitration matters under the Commercial Courts Act (having value over Rs1 Crore) an appeal would lie against an order allowing enforcement, however in arbitration matters where the value of the dispute was less than Rs1 Crore, no right to appeal would be available against an order allowing enforcement. This was an incongruous result not envisaged by the legislature.
Conclusion:
The Supreme Court by refusing to provide for an additional appeal under §13 of the Commercial Courts Act has once again taken a pro-arbitration approach in line with the object and reasons of the statute.
It was being increasingly noted that parties were relying on §13 of the Commercial Courts Act to file appeals against orders passed under the A&C Act, even where such appeals were not permitted under the A&C Act. The judgment clarifies that such an appeal is not available if it was barred under the statute. The judgment will ensure that frivolous appeals barred in law are no longer entertained by the Courts.
For further information on this topic please contact Tuli & Co
Tel T +91 22 6725 5421, fax F +91 22 6725 5422 or email lawyers@tuli.co.in
[1] Civil Appeal No. 1661-1663 of 2018
[2] (2011) 8 SCC 333
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
